S1 EP 9 Spend WiselyApril 4, 2021
Unfortunately, money can also bring hatred, greed and dishonesty.
That’s why learning how to correctly spend your money is important. You have to be equipped on how money works.
The art of financial planning is not only centered on budget, savings, investment and others. Proper spending should also be discussed. Once you’ve mastered how your money should be consumed, you will learn that all it takes is financial discipline to be the person you want to be.
We all want to be good with money.
To be honest, staying good in terms of my finances is something that I am constantly working on.
I will have days when I save and days when all I do is spend. I am not perfect and though I have a whole lot of posts talking about money management, I still stumble in terms of owning my budget, committing on my financial goals and so on.
The idea of being good with money is a skill one will need to master.
As Christians, we have the term called Financial Stewardship that simply explains that God gave us the anointing to take care of the wealth that He had blessed us with. He is the one and only source of our prosperity and He gave us the ability to get wealthy.
We all have an innate ability to be good with money. All it takes is for us to act.
How to be Good with Money in 8 Steps
Step 1. Become aware of your current financial status
I know by this time I’ve mentioned about net worth for almost every episode in the SavingsPinay Podcast. But I will repeat it again, your current financial status is such an important metric.
The basic idea about the net worth is simple. Your net worth is the sum of your assets minus the sum of your liabilities. In mathematical terms:
Total Assets – Total Liabilities = Net Worth.
Once you know your net worth, you will have a better idea of your current financial status.
It's been years since I started tracking my net worth by the numbers. Using the formula Total Assets – Total Liabilities = Net Worth, I manage to come up with my current value.
This helped me make sound goals and decisions in life. It’s good to see where I am at financially versus where I’ve come from. How much my money have grown and where it went.
If there’s one activity I want you to do as soon as possible, it will be to calculate your net worth.
Step 2. Assess where you are lacking discipline
Each one of us should practice discipline in terms of our finances.
No matter how much your current expenses or debts are, there will always be a tiny little amount of money that you could save. Change your lifestyle and think about the long term.
Examine your current lifestyle and pin point the areas you’ve been lacking the financial discipline to stay frugal.
Step 3. Save first and foremost before anything else
There’s no mistake that learning how to save money each month is one of the fundamental step towards financial freedom.
Your savings could affect how you live your life, achieve your goals and shape your future.
Everyone should save money each month. It’s a must, especially if you want to take charge of your finances one day.
Two things worth sharing about saving money:
1. It’s a must that save on a regular basis
2. It’s a must that you budget
Do not let savings become an option rather treat it is a priority.
Step 4. Talk to a person who is also good with money
As the saying goes, “Tell me who your friends are and I tell you who you are”.
Now if you want to be good when it comes to money then make sure that you surrounding yourself with people who will help you and will encourage you to stay financially fit. The very people who can influence you to strive to be better.
Find your own mentor or accountability partner.
Step 5. Track your progress
If you really want to be good in terms of how you manage your money then you might want to start tracking your progress.
How do you do this?! Secure a new or old notebook where you can record your monthly savings as well as your spending.
You may want to do this so that you have a vivid idea on the growth of your money.
Step 6. Set your Personal and Financial Goals
Goal setting is a great way one can start start the year, the month or any new day right. Once your goals are written down, it will be way easier for your to follow with action.
Goals are critical to financial success and learning how to set smart goals in life is one of the smart money moves you can do in your 20s. Craft a comprehensive financial goals which can act as a guide on how your finances will be in the next days, months or years to come
If you find setting goals hard then you might what to begin by asking the following questions;
How do you want your finances to be at the end of 2021?
What are your financial plans for the rest of the year?
Where do you see yourself 3-5 years from now?
Step 7. Learn from your mistakes
If you are currently in debt then make sure that you are not dragging yourself more on bigger debt.
Treat the wound while it is still fresh so that it won’t leave a scar in your financial life. If in the past you have an investment gone wrong then learn from the mistake and think better this time in how you will invest your money.
Step 8. Increase your cash flow
If you really want to step up in your game when it comes to money management then learn to increase your cash flow.
Do not be happy with just one source of income instead step up your game and find other means for you to earn. Everyone needs a hobby, a side hustle or a passion for profit project to do to be able to stay balanced.
If you haven’t considered making extra money through working on the side here’s my challenge for you.
Write down what you are passionate about. Is it taking photos? Writing online? Doing yours and others hair and makeup?
Find resources from web to actual people who have pursued the same passion and learn how they did it.
Just do it. Start doing what you really enjoy.
To end this episode I like to share with you things you need to spend your money on.
Here are different times it’s OK to spend:
Spend on things that appreciates in value
If you can, invest your money on things that will have a higher amount of value after such as in real estate or jewelry. You may also try branded items for they still have competitive market value even after some years.
Spend on moments that could lead to precious memories
Invest your time on people you value. Be present at times when you are needed and try to stay closer to your family, relatives, friends and others that are close to you. Remember the saying, "No man is an Island".
Spend in your health
I feel reminded on how important it is to be healthy. My dad always reminds me to be extra cautious when it comes to our health and say if and then we feel something wrong because once we get older for sure things will manifest more and it might be harder to heal. Remember health is wealth. Now in the current pandemic we realized the value of having a good immune system.
Spend on your tools
If you are a blogger you need to find tools such as a stable internet connection, good laptop, USB, external hard drive and even camera in order to completely do your thing. If you settle for equipment that doesn't add value on what you do then you will surely loose your will and productivity.It’s okay to spend on the tools you use to do your passion projects.
Spend on your passion
What's that one thing you are passionate about? Find out what your passion is and spend time pursuing it.
Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at www.izzaglinofull.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at firstname.lastname@example.org